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R12 – How to Define Primary Ledger in GL Oracle Apps

The ledger is a basic concept in Release 12. The ledger replaces the 11i concept of a set of books. It represents an accounting representation for one or more legal entities or for a business need such as consolidation or management reporting. Companies can now clearly and efficiently model its legal entities and their accounting representations in Release 12. This seems to be a major area in getting success of the shared service center and single instance initiatives where many or all legal entities of an enterprise are accounted for in a single instance, and data, setup, and processing must be effectively secured but also possibly shared.

Now, legal Entities can be mapped to entire Ledgers or if you account for more than one legal entity within a ledger, you can map a legal entity to balancing segments within a ledger.
While a set of books is defined by 3Cs

  1. chart of accounts
  2. functional currency
  3. accounting calendar,

The addition in this list the ledger is defined by a 4th C: the accounting method.

This 4th C allows you to assign and manage a specific accounting method for each ledger. Therefore, when a legal entity is subject to multiple reporting requirements, separate ledgers can be used to record the accounting information.
Accounting Setup Manager is a new feature that allows you to set up your common financial setup components from a central location.

General Ledger Setup Flowchart

While you can set up your Oracle General Ledger application in many different ways, and defer optional set up steps until you are ready to use the corresponding functionality, we recommend you use the order suggested in the following flowchart: Some of the steps outlined in this flowchart and setup checklist are Required and some are Optional. You need to perform Optional steps only if you plan to use the related feature or complete certain business functions.

The following setup steps are a high level overview of the setup steps related to Oracle
General Ledger and Accounting Setup Manager. 



Leger is created in 5 stages
1. Create Legal Entity.
2. Define Leger.
3. Define Accounting Options.
4. Assign Legal entities to your Ledger .

5. Assign Balancing Segment Values to respective Legal entities. 


Navigation: General Ledger –> Setup –> Financials –> Accounting Setup Manager –> Accounting Setups.


  • Create legal entity
Click on Create Accounting Setup and then click on Create Legal entity.

Click on Apply and then click on Next.

  • Define Leger



Click on Next and then Finish.

  • Define Accounting Options

Click on Define Accounting Options and click on update.


 Click on Next, and assign Retained earnings Account.

  
  Click on Next, Next, and Finsh.

Assign Legal entities to your Ledger.

Click on Add Legal Entity.
  
 Click on Add Legal entity.

 Add your Legal entity and click on Apply.


  • Assign Balancing segment values to legal entities

Click on the update Balancing Segment Values


Click on Add Balancing Segment Value.


Assign Balancing segment values to these legal entities.


Click on Apply and then click onComplete.


 Once you complete ledger we are getting the following Warning.


 Click on Yes.

 Ofter click on the yes we are getting the following confirmation. 


Click on Return to Accounting Setups.

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How to Define Operating Unit in R12

An organization that uses Oracle subledgers, such as Oracle Cash Management, Order Management and Shipping Execution, Oracle Payables, Oracle Purchasing, Oracle Receivables, and related products. It may be a sales office, a division, or a department. Operating units are not associated with legal entities. 

Operating units are assigned to ledgers and a default legal context. Information is secured by operating unit for these applications using responsibilities. Each user can access, process, and report on data only for the operating units assigned to the MO: Operating Unit or MO: Security Profile profile option. 

The MO: Operating Unit profile option only provides access to one operating unit. 

The MO: Security Profile provides access to multiple operating units from a single responsibility. You can define operating units from the Define Organization window in Oracle HRMS or from Accounting Setup Manager in General Ledger.

For further reference: Visit Google.com and search for “Oracle Multiple Organization Manual”. download the pdf file for detailed information on multiple ORG.

Prerequisites for defining operating unit:

 1. Define Location.
 2. Define Business Group.
 3. Define Ledger.

 Navigation: HRMS –> Work Structures –> Organization –> Description.

Click on New.


Type your operating unit name, type ,location and organization classification.

   
Click on Others.

Select operating unit information.

   
Enter the Primary Ledger name, Legal entity name and Operating unit short code

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TDS Setup for suppliers in R12

This document explains the basic setup needed to setup TDS for suppliers in R12.

Setup Steps
1. Pan Number at the Legal Entity level
When Legal Entity is created, enter the Pan Number in the “Pan” field. This field is mandatory for India territory.

2. Attach Inventory Organization in Location
Create the inventory organization and attach it with the location. Only those locations with inventory organization attached will appear in the location field of organization additional information form.

3. TDS Lookups (Seeded values)
We need to make sure that the following seeded values are available in Asis/Pacific Localization lookups.
  1. JAI_AP_TDS_SECTION_TYPES
  2. JAI_TDS_SECTION
  3. JAI_TDS_VENDOR_TYPE
  • TDS Vendor type is used for categorizing vendors from TDS perspective.
  • TDS Vendor type and TDS section code determines TDS rate and surcharge based on TDS thresholds defined
4. Create Organization Additional Information and Tax calendar for the organization
For all inventory organizations, additional localization information needs to be maintained.
  1. We need to define two records here for each organization, one with location and another without location.
  2. Excise details are mandatory for manufacturing organization
  3. For trading organization, excise tab details should not be filled and trading information tab should be entered.
  4. Pan No, Tan No, Ward No are currently redundant and not used
  5. Only one tax calendar can be active at a time.



5. Create Regime Registration for TDS
Query the recode with Regime code as TDS. All the details except registration value in the registration tab will be defaulted. Enter appropriate registration value against the registration name. These details would get defaulted for the operating units and can be changed, if required.


6. Enter TDS Period

We need to enter the TDS period for calculating the TDS amount for the period. TAN number will be available in the LOV only if regime registration is completed for TDS.

7. Create TDS Authority as Supplier
We need to create a supplier with supplier type as “India TDS Authority”. Enter all the mandatory fields like payment method, payment terms etc.
Other suppliers are entered as usual.
8. Create a Tax definition
We need to create different tax codes for different section codes and tax rates. Enter the basic percentage in the Percentage field and enter additional surcharge details. System will automatically calculate the total percentage. If any lower TDS is involved for certain forms like Form C, enter the certificate name and original tax percent.

9. Create Threshold Setup
Threshold is defined for each section by TDS vendor type. Thresholds applicable to specific vendors are defined as exception setups and vendors are assigned manually to this setup.
There are two types of Thresholds
  1. Single – Applicable to a Single transaction
  2. Cumulative – In this case, TDS is applicable only when the cumulative purchases made from the supplier in one financial year exceeds specified limit i.e, Cumulative threshold amount.
Multiple thresholds with different tax rates may exist. For example, tax rate is 12 percent for the cumulative amount below 10L and tax rate of 12.24 percent for the cumulative amount above 10L.
Before cumulative threshold is reached, single invoice amount greater than the threshold limit for a single invoice attracts TDS at predefined rate
Threshold Amount = Total Invoice Amount – Total Invoice Cancelled Amount – Total Invoice Apply Amount + Total Invoice Unapply Amount


10. Create Supplier Additional Information

We need to add Pan Number, TAN number and TDS Details for each supplier. We should create two records for each supplier, one without supplier site and another with supplier site. Pan number should be confirmed at the supplier level and it can not be modified thereafter.
Enable invoice approval checkbox, if TDS invoice created for the supplier should be in approved status.
Enter the default TDS Section and/or Tax name, if TDS tax code should be automatically defaulted in the invoice for this supplier. Tax code defaulting logic is given below.
If default section and default tax name are not given in the supplier additional information and if tax name is not manually entered in the invoice, then TDS will not be calculated and no TDS invoice will be generated.


11. Review and Complete DFF and Profile Settings

TDS tax code is now captured in Global Descriptive Flexfield in the invoice distribution screen. We need to make sure that the DFF JG_AP_INVOICE_DISRIBUTIONS is enabled.
Also define the following profile option values at the responsibility level
Profile Options
Values
JG: Application
Payables
JG: Product
Asia Pacific Localization
JG: Territory
India
The country used against the Legal entity / Operating unit has to be India
Invoice Transaction
Let us now create an invoice for the “Google” supplier.
Invoice Amount – 90000
TDS Tax rate – 12% if the invoice amount is above 50001
Hence the TDS Invoice amount will be 90000 * 0.12 = 10800
Make sure that the taxation country is defaulted as ‘India’

As soon as the invoice distribution details are saved, the tax code ID is defaulted in DFF as shown below. The user can change the tax code, if required.
When the invoice is validated, system will run a concurrent program which will create TDS invoice (Credit Memo) for the supplier and another standard invoice for the TDS authority.

Click on ‘View Output’ for ‘Import TDS Invoices’ concurrent program to check for any errors. The report shows all the imported and error lines.
The invoice number format for the credit memo for the supplier and standard invoice for the TDS authority is given below
Supplier Credit Memo: (Original Invoice Number)-TDS-CM-(Serial Number)
Invoice for TDS Authority: (Original Invoice Number)-TDS-SI-(Serial Number)
References
  1. Oracle Financials for India – Implementation Guide
  2. Oracle Metalink Docs
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